Most & Least Independent States

Adam McCann, Financial Writer • Jun 19, 2019

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Americans value independence. We fought hard for it during the American Revolutionary War. Today, however, we celebrate not only our freedom from the British crown but also our strong ability to rely upon ourselves as individuals. It’s a virtue we bring up in our children, employees and organizations.

But what does it mean for whole populations to be “independent” in the modern sense of the word?

In this report, WalletHub’s data team addressed that question by comparing the 50 states based on five sources of dependency: consumer finances, the government, the job market, international trade and personal vices. We broke down these categories into 39 key indicators of independence in order to determine which states are most self-sustaining. Read on for our findings, methodology and expert advice on overcoming our reliance on others.

Ask the Experts

Reliance on others can be challenging to overcome. For the best ways to achieve greater independence in several of the dependency categories we examined in this report, we asked a panel of experts to share their thoughts on the following key questions:

Is it fair that some states are more dependent than others on the federal government?

What tips do you have for a person who wishes to increase his or her financial independence? What are some first steps?

What tips do you have for a person who wishes to reduce his or her job dependency? Should they try to join the “gig” economy?

Should presidential campaigns be publicly funded in order to help ensure the president is as independent as possible from special interests?

Should states try to make their economies more or less dependent on international trade? How?

Methodology

In order to determine the most independent states, WalletHub compared the 50 states across five key dimensions: 1) Financial Dependency, 2) Government Dependency, 3) Job-Market Dependency, 4) International-Trade Dependency and 5) Vice Dependency.

We evaluated those dimensions using 39 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the highest level of independence.

We then determined each state’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.

Financial Dependency – Total Points: 20

Median Credit Score: Full Weight (~1.18 Points)

Share of Households with Rainy-Day & Emergency Funds: Full Weight (~1.18 Points)Note: This metric is based on the Federal Deposit Insurance Corporation’s economic inclusion survey and measures to the share of households who saved for unexpected expenses or emergencies in the past 12 months.

Median Household Income (Adjusted by Cost of Living Index): Full Weight (~1.18 Points)

Poverty Rate: Full Weight (~1.18 Points)

Age Dependency Ratio: Full Weight (~1.18 Points)Note: Age dependency ratio is the ratio of dependents – people younger than 15 years or older than 64 years – to the working-age population – those ages 15-64 years.

Share of Millennials Living with Their Parents: Full Weight (~1.18 Points)

Share of Low-Income Households where No Adults Work: Full Weight (~1.18 Points)

Share of “Underwater” Mortgages: Double Weight (~2.35 Points)Note: This metric measures the share of homes with mortgages that have negative equity.

Tax Freedom Day: Full Weight (~2.50 Points)Note: “Tax Freedom Day” refers to the day when the state’s taxpayers have collectively earned enough money to pay their federal, state and local tax bills for the year. This metric measures the number of days since the beginning of the year that the event takes place (sooner indicates greater independence).

Job-Market Dependency – Total Points: 20

Industry Variety: Full Weight (~3.33 Points)

Job Growth Rate: Full Weight (~3.33 Points)

Unemployment Rate: Full Weight (~3.33 Points)

Long-Term Unemployment Rate: Full Weight (~3.33 Points)Note: This metric measures the share of the unemployed who had been jobless for 27 weeks or longer.

Underemployment Rate: Full Weight (~3.33 Points)

Job Creation Index: Full Weight (~3.33 Points)Note: This metric is based on Gallup’s “Job Creation Index” and measures the share of workers who reported that their employer is increasing its workforce minus the percentage reporting the opposite.

Sources: Data used to create this ranking were collected from U.S. Census Bureau, Bureau of Labor Statistics, Federal Deposit Insurance Corporation, FINRA Investor Education Foundation, The Pew Charitable Trusts, Council for Community and Economic Research, Zillow, Tax Foundation, United Health Foundation, Gallup, International Trade Administration, U.S. Bureau of Economic Analysis, Substance Abuse and Mental Health Services Administration, Centers for Disease Control and Prevention, National Council on Problem Gambling, National Telecommunications and Information Administration, Minnesota Population Center, University of Minnesota, TransUnion, Renwood RealtyTrac, Administrative Office of the U.S. Courts, U.S. Department of Housing and Urban Development and WalletHub research.

Image: Steve Allen / Shutterstock.com

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